Q: As bankruptcy attorneys do you have clients who get title loans? Are car title loans a good idea? Should we use a pawn shop?
A: Title loans can be a good idea, but be very careful. Financial desperation can lead people to the “fringe banking” industry for a short-term cash advance at a very high interest rate. This may take the form of a “payday loan,” a loan in anticipation of a refund, or a pawn transaction involving your motor vehicle’s title.
The working poor are some of the main customers of these “sub-prime” lenders. In the state of Georgia, the interest rate some companies charge is capped by law at 25 percent monthly (300 percent annually) for the first three months and 12.5 percent monthly after that (150 percent annually). This means a combined maximum yearly interest rate of 187.5 percent.
In the case of title pawns, state law [O.C.G.A. Section 44-12-138(b)(3)] requires the pawnbroker to provide you the following written statement when you pawn your vehicle:
Failure to make your payment as described in this document can result in the loss of your motor vehicle. The pawnbroker can also charge you certain fees if he or she actually repossesses the vehicle.
Some car title loan companies include TitleMax, 1800newdeal.com, TitleMasters, eztitlepawn.com, Old Republic Title, Emergency Title Loan & autocashofgeorgia.com.